Co-written by Yagmur Menzilcioglu
While not widely reported in the West, Turkish Prime Minister Binali Yıldırım last month submitted to parliament a government bill that would provide Turkish nationals a “wealth amnesty” until the end of 2016 to bring money, gold, and other financial instruments into the country. Individuals will be able to repatriate funds tax free and without needing to declare their origin. The new bill could turn Turkey susceptible to illicit finance schemes, and further damage Ankara’s image, tarnished by its already-deepening complicity in terrorism financing.
Turkey’s Islamist-rooted AKP government seems eager to pass the bill, and has decided to hold plenary meetings during the parliament’s summer break despite opposition protests. Critics argue that the timing of the amnesty is not coincidental and suggest that its aim is to save AKP figures from possible charges of bribery and corruption. In fact, the bill was announced the same day that Turkey’s leading opposition daily announced a forthcoming exposé on the Panama offshore dealings of six businesspeople closely linked to the country’s president, Recep Tayyip Erdoğan.
Meanwhile, pro-government media present the bill as an effort to lure home one-third of the estimated $100 billion dollars that Turkish nationals and companies keep abroad. The cash injection would certainly help the Turkish economy, which is currently facing serious liquidity constraints after short-term foreign investors’ recent flight amidst waning investor confidence.
Under AKP rule, Turkey implemented similar wealth amnesties in 2008, 2011, and 2013. Earlier bills, which required repatriated funds to be declared to the Ministry of Finance and taxed, failed to deliver the intended results, however. It is for this reason, Turkey’s current Finance Minister emphasized, that the upcoming amnesty will be tax exempt. In other words, this time the priority is not to collect taxes but to respond to the Turkish economy’s urgent need for currency.
The AKP’s fourth wealth amnesty in eight years is sure to magnify Turkey’s image as a growing hub of illicit finance. Critics argue that the current bill amounts to a free pass for money laundering, including possibly for political figures with accounts in Panama and Switzerland. Furthermore, since the country is a hotbed of terrorist activity ranging from the Kurdish militant PKK to the Islamic State, Ankara has a lot to lose if such groups utilize the loopholes for terrorism finance. Thus, this initiative that aims to boost the Turkish economy could further exacerbate a heightened security crisis that has already shaken investor confidence.
Aykan Erdemir is a former member of the Turkish parliament and a senior fellow at the Foundation for Defense of Democracies, where Yağmur Menzilcioğlu is an intern. Follow them on Twitter @aykan_erdemir.